The Real-Time Market
The real-time market (RTM) is a spot market for energy. While the DAM produces the schedule and financial terms of energy production and use for the operating day, a number of factors can change that schedule, including unforeseen generator or transmission outages, transmission constraints or changes from the expected demand. The RTM addresses these deviations from the day-ahead settlement.
Day-ahead LMPs can differ from real-time LMPs when demand bids from the day ahead are not identical to actual system demand. This causes the real-time dispatch to deviate from the day-ahead financial commitment. For generators, the spot market provides additional opportunities to offer supply into the market to help address these variations. Those scheduled in the day-ahead market that fall short of their commitment may secure additional energy from the RTM to cover that loss. Additionally, generator offers that did not clear in the day-ahead market are able to submit bids into the RTM through a re-offer period.
After the DAM clears and its results are published, a two-hour re-offer period commences beginning at 4:00 p.m. the day before the operating day. At this time, only offers to supply that did not clear in the DAM may be re-offered for the RTM. Demand bids, incs and decs may submit only in the DAM and, therefore, do not qualify for the re-offer period.
When the re-offer period closes, ISO New England performs a reliability assessment. The cleared day-ahead offers from generators and bids from loads, not including any virtual supply, are compared with the ISO's forecast of energy, reserves and load capability, or regulation (see Ancillary Services handout). The ISO will, if necessary, select additional resources, based upon re-offers, that can serve the projected need for energy and real-time ancillary services. This is called the "Current Operating Plan" and is adjusted throughout the day should system conditions warrant.
In real-time, generators can also deviate from the day-ahead clearing schedule by submitting a request to "come on" in any hour not cleared in the day ahead through a self-commitment and self-schedule submittal, or ask to "stay off" in any hour even if they have already cleared day ahead. These requests require approval from the ISO based on a reliability assessment.
What's more, participants will, continuously throughout the day, be allowed to offer or request imports and exports of electricity from neighboring control areas with at least one hour's notice. In real-time, ISO New England will issue 'dispatch rates' and dispatch targets. These are five-minute price and megawatt signals based on the aggregate offers of generators, which will produce the required energy production.
In a change from the original market in New England, real-time prices are based on actual power system output and are said to be set ex-post, which differs from the original ex-ante pricing in which pricing is based on desired, or assumed, dispatch levels. This methodology enforces market discipline because it permits generators to set prices only if they have followed dispatch instruction.
Differences from the day-ahead quantities cleared are settled at the real-time LMP. Those who were committed to produce in the day-ahead are compensated at (or pay) the real-time LMP for the megawatts over- or under- produced in relation to the cleared amount. Those who paid for day-ahead megawatts are paid (or pay) the real-time LMP for megawatts under- or over- consumed in real-time. The same software calculates both day-ahead and real-time LMPs.
